- Canada is bidding adieu to gas-powered vehicles as Environment Minister Steven Guilbeault finalizes new regulations to replace them with zero-emission vehicles by 2035, potentially lifting related stocks
- Only about one in 10 new Canadian vehicle registrations in 2023 have been electric, with a total of 26.3 million total vehicles registered in 2022
- Stocks poised to benefit from the transition are active in mining, automotive and battery technology
Canada is bidding adieu to gas-powered vehicles as Environment Minister Steven Guilbeault finalizes new regulations to replace them with zero-emission vehicles by 2035, potentially lifting related stocks.
Automakers will have to gradually increase electric vehicle (EV) production each year, delivering on a promise from the Liberals made more than two years ago.
By 2026, automakers must ensure that 20 per cent of vehicles on the Canadian market are battery electric or a long-range plug-in hybrid model. The number will rise to 23 per cent in 2027, 34 per cent by 2028, 43 per cent by 2029, and 60 per cent by 2030, ultimately reaching 100 per cent in 2035. Given that only one in 10 new vehicle registrations in 2023 have been electric, sales would need to more than double to meet the 2027 target.
The mandate, which falls under the Canadian Environmental Protection Act, will dole out one credit per EV sold, creating a credit marketplace to better enable manufacturers to meet their yearly targets. Up to 10 per cent of yearly credits can be earned by investing in public fast-charging stations.
Automakers have expressed reservations about the mandate, given a lack of charging stations and government incentives for consumers to buy EVs. According to Natural Resources Canada, more than 25,500 charging ports are in Canada across 10,568 locations, up from 23,000 ports in 9,100 locations in August. Approximately 85 per cent of the chargers are concentrated in Quebec, Ontario and British Columbia, determining the direction of the government’s goal of deploying 84,500 charging ports by 2029.
Guilbeault presented the final version of what is known as the Electric Vehicle Availability Standard on Tuesday at George Brown College in Toronto, which launched an electric-vehicle service technician training program in 2022.
“There’s no mistaking it. We are at a tipping point,” he said, pointing to robust growth in Canadian EV sales in Canada.
According to BNN, EV sales have doubled over the past three years, growing to 132,783 through September 2023, supported by Quebec and British Columbia, both of which have surpassed the 20-per-cent mark for EVs on the road thanks to their provincial EV sales mandates and the longest-running consumer rebates in Canada. Yukon and the Northwest Territories added rebates in 2020, along with the four Atlantic provinces in 2021, offering incentives above and beyond the C$5,000 federal rebate for EVs.
The new mandate coincides with Canadian EV inventory growing by 146 per cent year-over-year as of November 2023, calling into question the necessity of the regulation, especially considering how the United States, a major Canadian customer, has only 10 states with mandates similar to Canada’s. The Liberals, who see that number growing to 20 states by 2027, believe the policy is aligned with a global tailwind.
Stocks positioned to benefit from Canada’s phase-out of gas-powered vehicles
Radically shifting the makeup of Canada’s more than 26 million registered vehicles could have an outsized effect on the performance of related EV, mining and battery technology stocks. Here is a list of names with high-growth prospects worth considering for value or momentum plays, as indicated by recent returns:
- First Hydrogen (TSXV:FHYD), down by 65.22 per cent year-over year
- GreenPower Motor Company (TSXV:GPV), up by 53.36 per cent year-over-year
- Lion Electric (TSX:LEV), down by 89.12 per cent since inception
- Exro Technologies (TSX:EXRO), down by 34.97 per cent year-over year
- Hypercharge Networks (NEO:HC), down by 67.2 per cent year-over-year
- Vicinity Motor (TSXV:VMC), down by 40.86 per cent since 2018
- Leading Edge Materials (TSXV:LEM), down by 34.09 per cent since 2018
- Nano One Materials (TSX:NANO), up by 93.02 per cent since 2018
- York Harbour Metals (TSXV:YORK), down by 83.02 per cent year-over-year
- Lithium Americas (TSX:LAC), down by 26.15 per cent year-over-year
- Ucore Rare Metals (TSXV:UCU), up by 16.67 per cent year-over-year
- Ballard Power Systems (TSX:BLDP), down by 30.97 per cent year-over-year
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